Before this decade, it was unheard of for crude oil prices to jump a few dollars a day unless the U.S. was under a trade embargo or about to go to war. And even then, the outright price of oil was hardly prohibitive (recall that for the entire month leading up to the Iraq war in March 2003, oil did not cross $38 a barrel, let alone $100).
Yet today, without a major media event in sight, we witness price swings that would put the wartime spikes of yesteryear to shame. Despite the American Petroleum Institute's pronouncement in June that oil supplies in the U.S. hit a high not seen in more than three decades, the two-buck oil price pop – including today's – is now seen as commonplace.
Why? It has become a nettlesome question for no fewer than a dozen government departments and agencies, among them the U.S. Department of Justice, the National Association of Attorneys General, the Commodity Futures Trading Commission, the Federal Bureau of Investigation, the Federal Energy Regulatory Commission, the Department of Homeland Security, the Federal Trade Commission, the Department of the Treasury, the Federal Reserve Board, the Securities and Exchange Commission, the Department of Agriculture and, of course, the Department of Energy.
While intelligent minds may differ as to why oil prices have risen as much as 630% over the past decade – speculation or fundamentals? – one fact is no longer up for debate: a shift seems to have taken place in oil-patch tectonics that's keeping prices propped up. And the cost of ignoring it does not bode well for consumers or our national security.
The rhetoric offered by Washington has been as impressive as it has been ineffectual, with a flurry of investigations, working groups and general inquiries coming up empty, even as they stretch for years into the future, racking up taxpayer dollars. Taking note, a handful of senators and even President Obama have recently ramped up the pressure.
Maria Cantwell, Democratic senator from Washington state, advanced questions during a Senate hearing two weeks ago meant to ascertain the progress of the Department of Justice's much-touted Oil and Gas Price Fraud Working Group, which involves many of the agencies listed above, in addition to state authorities. Pledging to "monitor oil and gas markets for potential violations of criminal or civil laws to safeguard against unlawful consumer harm," the DOJ has sought to uncover unlawful activity in the energy market, though it has shied away from explaining exactly how. Cantwell is known for her strong positions on energy market issues after tangling with Enron while still a junior senator. The scandal, she has noted, proved "that fierce market manipulation does happen."
Since it formed in April at the behest of President Obama, very little has been heard from the DOJ working group. This is disappointing, as the DOJ is one of the only arms of the federal government with the statutory power to bring suspects to justice and imprison them, as opposed to civil offenders, who are simply fined (and usually pay much less than they profited in breaking the law.) "We are encouraging an increase in communication, both formal and informal, and information-sharing among the government agencies," a DOJ spokeswoman says. "So far, there have been no particular cases of finding fraud, civil or criminal."
Information-sharing? With tactics like that, offenders better watch out.
